Separability and aggregate shocks in the life-cycle model of consumption: evidence from Spain

The purpose of this paper is to test the life-cycle permanent income hypothesis using an unbalanced panel from the Spanish family expenditure survey. Our model accounts for aggregate shocks and non-separability in the Euler equation among consumption goods, contrary to most of the Literature in this area. Our results do not indicate excess sensitivity of consumption growth to income

INNOVATION AND JOB CREATION AND DESTRUCTION: EVIDENCE FROM SPAIN

In this paper we examine the effect of innovation on job creation and job destruction in Spanish manufacturing. Our empirical analysis is based on firm-level longitudinal data from which we have information on employment and innovation activity. The estimation approach consists of a two-step procedure that takes into account the fact that firms endogenously choose positive, negative or zero growth in employment, in which the selection mechanism is an ordered probit. Our results point out the importance of innovation variables on employment growth: innovative firms create more jobs -and destroy fewer- than non-innovative, and the degree of technological effort has a strong positive effect on net employment creation.Labour Demand; Technological Innovation; Sample Selection.

-THE RESPONSE OF EXPENDITURES TO ANTICIPATED INCOME CHANGES: PANEL DATA ESTIMATES

Standard models of intertemporal allocation predict that the time path of expenditures should beindependent of the time path of income. Recently two papers, Parker (1999) and Souleles (1999)have suggested that U.S. households have a high marginal propensity to spend within yearanticipated income changes. We use an expenditure survey panel from Spain to re-examine thisissue. We exploit two important features of the Spanish data. First, we have quarterly panel datathat follows households for more than four quarters. Second, we use the fact that workers areexogenously sorted into one of two payment schemes: some receive the same amount eachmonth of the year and others receive an extra payment in June and December. The extra paymentis large and predictable. We examine the detailed pattern of expenditures over the year to seewhether they differ between the two groups. We fail to find even weak differences. Wecomplement this with a conventional Euler equation analysis of excess sensitivity. Our predictingequation for (quarterly) earnings growth is much better than usual and is likely to give a powerfultest of the hypothesis that predictable changes in income do not lead to changes in expenditurepatterns. The results of this analysis confirm the graphical analysis: we find no evidence ofexcess sensitivity. We conclude that households in normal times do smooth consumption overthe year. We suggest a reconciliation of our results with those of Parker and Souleles.Consumption; Excess Sensitivity; Smoothing.

HABITS AND HETEROGENEITY IN DEMANDS: A PANEL DATA ANALYSIS

We examine demand behaviour for intertemporal dependencies, using Spanishpanel data. We present evidence that there is both state dependence and correlatedheterogeneity in demand behaviour. Our specific findings are that food outside thehome, alcohol and tobacco are habit forming whereas clothing and small durablesexhibit durability. We conclude that demand analyses using cross-section data thatignore these effects may be seriously biased. On the other hand, the degree ofintertemporal dependence is not sufficiently strong to make composite `consumption'significantly habit forming, as has been suggested in some recent analyses.Habits, State dependence, correlated heterogeneity.

Innovation and job creation and destruction : evidence from Spain

In this paper we examine the effect of innovation on job creation and job destruction in Spanish manufacturing. Our empirical analysis is based on firm-level longitudinal data from which we have information on employment and innovation activity. The estimation approach consists of a two-step procedure that takes into account the fact that firms endogenously choose positive, negative or zero growth in employment, in which the selection mechanism is an ordered probit. Our results point out the importance of innovation variables on employment growth: innovative firms create more jobs -and destroy fewer- than non-innovative, and the degree of technological effort has a strong positive effect on net employment creation

- DO WIVES EARNINGS CONTRIBUTE TO REDUCE INCOME INEQUALITY?: EVIDENCE FROM SPAIN

In this paper we analyze the effect of female labor force participation on income inequality. We present evidence from Spain by using data from the Family Expenditure Survey for 1980 and 1990. The case of Spain is particulary interesting because inequality decreased over the eighties, while the labor force participation rate of married women increased substantially over the same period. Our results show that although female labor force participation has contributed to decrease income inequality in Spain, it is far from being one of the main factors behind the observed decrease in inequality over the eighties.Income Ínequality; Female Earnings; Female Participation.

Estimating Binary choice models from cohort data

In this paper we discuss the estimation of binary choice models with individual effects, when the data available are time series of independent cross-sections. We specify a random effects model assuming that the conditional expectation of the individual effects is a linear function of the explanatory variables, and we show how to obtain a consistent estimator of the reduced form parameters. Then, we consider a minimum distance estimator and a within-groups estimator of the structural parameters, and we derive their asymptotic distributions. Finally, we carry out some Monte Carlo simulations to analyze the small sample performance of our estimators

INNOVATION AND JOB CREATION AND DESTRUCTION: EVIDENCE FROM SPAIN

In this paper we examine the effect of innovation on job creation and job destruction in Spanish manufacturing. Our empirical analysis is based on firm-level longitudinal data from which we have information on employment and innovation activity. The estimation approach consists of a two-step procedure that takes into account the fact that firms endogenously choose positive, negative or zero growth in employment, in which the selection mechanism is an ordered probit. Our results point out the importance of innovation variables on employment growth: innovative firms create more jobs –and destroy fewer– than non-innovative, and the degree of technological effort has a strong positive effect on net employment creation.

Public Transfers to the Poor: Is Europe really more Generous than the United States?

Fighting poverty is one of the main goals in the most societies. This is usually done by the transferring resources to the poor. There exists a widespread view that the European countries are more generous to the poor than the United States. We study whether this is really the case. Firts we review the evidence on aggregate spending and we do not find convincing support for that view. Secondly, we analyze microeconomic evidence from the Current Population Survey and the European Community Household Panel and find mixed results. In particular, when we use the concept of relative poverty, we find that average transfers per poor person in the United States are 54% higher than in the European Union. When we exclude the old from the sample, this difference reduces to 20%.Poverty, Public Transfers, Redistribution, Welfare State

VERTICAL TRANSMISSION OF CONSUMPTION BEHAVIOR AND THE DISTRIBUTION OF SURNAMES

This paper attempts to detect the existence of links in consumptionpreferences between generations. Preferences for consumption goods may bedetermined by the preferences of parents (vertical transmission) and/or bypreferences arising from the environment (horizontal transmission). Wepropose an indirect methodology to overcome the lack of data on consumptionchoices of dynasties, i.e., parents and their adult offspring. This new approachis based on the analysis of the correlation between the geographicaldistributions of surnames and consumption choices. Our results show that thereis horizontal transmission of preferences regarding non-food items and possiblyvertical transmission for food items.Preference formation, surnames, vertical and horizontal transmission.